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Mark Hulbert: Here’s proof that investors are wising up to Wall Street’s earnings game

CHAPEL HILL, N.C. — Investors are finally wising up to the game companies play as they try to manage Wall Street’s expectations.

What those companies are trying to do, of course, is report that they have beat the consensus of Wall Street analysts’ earnings estimates. That’s a tall order, since it requires them to keep those expectations artificially low over the three months prior to earnings season.

While you might think this is perhaps possible for one or two quarters, it’s hard to imagine them getting away with it quarter after quarter. Wouldn’t Wall Street analysts—who presumably are quite intelligent—eventually catch on to the game?

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